Summertime Ends 2010

Summer time will end on Sunday 31 October at 2.00am GMT throughout European Union Member States. The Clocks go backwards an hour. This means that at 2.00am British Summer Time (BST) the UK will move to 1.00am Greenwich Mean Time (GMT).

The 9th EC Directive on summer time harmonised, for an indefinite period, the dates on which summer time begins and ends across member states as the last Sundays in March and October respectively. Under the Directive, summer time begins and ends at 1.00am GMT in each Member State. Amendments to the Summer Time Act to implement the Directive came into force on 11 March 2002.

Time zones are the responsibility of individual Member States and vary across the EU. The UK is not planning to move to Central European Time.

Pension Changes

On 14 October 2010 the Government announced a number of changes to tax relief for pension contributions, to take effect from 6 April 2011 and 6 April 2012 as follows:

• The annual allowance will set at £50,000 from 6 April 2011.
• Unused annual allowance can be carried forward for up to three years.
• Pension input periods (PIPs) that straddle 14 October 2010 have special rules.
• The lifetime allowance will be £1.5 million from 6 April 2012.

The previous Government planned to introduce a tax charge from 6 April 2011 which would have clawed-back pension tax relief from those with total incomes over £150,000. That tax charge will NOT now be introduced, but the anti-forestalling rules that were designed to discourage people from loading up their pension funds before the new charge came into effect continue to apply until 5 April 2011.

Under the new rules, from April 2011, all taxpayers will get full tax relief on all their pension contributions up to the annual allowance (AA) cap. However the AA cap may be expanded by any unused AA from the previous three tax years. For the purposes of this carry-forward calculation the AA cap is deemed to have been £50,000 in those earlier years. Both employees’ and employers’ contributions are deducted from the available AA cap.

Example

Abigail’s personal pension scheme has received the following total contributions:

tax year	Contributions	Deemed AA cap	AA carried forward
2008/09	£60,000	£50,000	NIL
2009/10	NIL	£50,000	£50,000
2010/11	£30,000	£50,000	£20,000
Total			£70,000

Abigail can contribute up to £120,000 (£70,000 + £50,000) into her pension scheme in 2011/12 and will achieve full tax relief on those
contributions.

There is already some confusion over who will be able to take advantage of this carry-forward procedure, as the HMRC guidance for individuals does not agree with the draft legislation on this point. The draft legislation says an individual can carry forward any unused annual allowance if he was a member of a registered pension scheme for the year concerned, even if he made no pension contributions in that tax year. The HMRC guidance implies the individual must have been an active member of a pension scheme and made at least some contributions in the year.

Story from: Tax Advice Network